Sorting through the piles of technology marketing blurb and deciding what is genuinely useful is no easy task. IT maverick Hugh Robertson tells Alaric Nightingale what he values and what he does not
Any broker could be forgiven for feeling slightly nauseous every time they pick up a newspaper. Endless declarations about new and revolutionary technology abound, begging the question: “What are you doing to keep upNULL” For Hugh Robertson, though, not all the hype is justified.
First, the internet's power is exaggerated. “You see heaps of rubbish coming out of the internet at the moment,” says Robertson, a partner at H&R insurance Services, an Aberdeen brokerage which last year had a gross written premium around £14 million. “The internet can waste of money and space. We think that we are about four months away from going on the internet. We see it as providing the ability for the customer to do their own administration.”
Security systems
Robertson believes that the creation of effective security systems will enable customers to carry out their own administrative tasks and then trade with their brokers electronically.
“They could do their own changes of vehicle, changes of car – add drivers, take drivers off – renew their policies, pay money etc. etc. And that's what we see as the big thing about the internet. That could represent maybe seven or eight of my staff. If the customers all did it that way, imagine all the things my staff would be able to do. It could save a huge amount of money and we wouldn't have a big advertising bill to pick up.”
The question is, though, will somebody really go to the trouble of seeing an advert, writing down the e-mail address and logging on to the internet, or are they just going to pick the phone for a quoteNULL
“I think they're going to pick up the phone and say give us a quote. More and more people are going to use the internet, but the people I speak to are just getting heaps, and heaps and heaps of rubbish. If you do a full quote, you have got to be talking 15 minutes, and then you've got to do that four times to get comparisons. The internet also allows your competitors to come in and work out your rating structure and spend hours and hours figuring out what you're up to.
“The other thing with giving quotes is that you've got to understand things in detail: what their convictions are, the accident problems. We would not like to put people on cover without knowing what the risks are.”
“The problems are just the technology – the security, it is a lot more difficult to do the administration work than it is to do quotes.”
Robertson believes that, at the moment, a more straightforward exploitation of technology brings greater profits. “They have got to master the ability to get information out of the system to run the business efficiently: statistics. Statistics have got to be one of the biggest things. Statistics on the broking side, statistics on the financial side. Never mind insurance. Insurance is an irrelevance.”
Robertson believes that statistics, interwoven with effective customer relationship management (CRM) are vital.
“It all comes down to the people you've got. We no longer take insurance staff. We take people coming from somewhere else. We take nice people who are nice on the phone and intelligent and start from there. We used to take techie people, but they would always try to put across their view and the customer doesn't like that.”
Call routeing
To facilitate its CRM, H&R has been working on a call routeing system to ensure the simple things. Like a caller being connected to the same operator every time. Or being able to identify rival brokers trying to find out rates. Or routeing calls through to the right people first time.
“We have been looking at the number of transfer calls where someone picks up a call and passes it somewhere else, you're probably looking at 350 to 400 calls a day. At 30 seconds a time each, that starts to tot up – that's a lot of staff.”
By analysing and dealing with such issues, H&R can run at about a 1,000 policies per staff per year, while the average on the market is between 500 and 600.
“We do this by ensuring that everything we do is the most cost efficient. For example everything that comes in is optical scanned so you can go to any screen and read any correspondence from any customer – you don't have to get up from your desk, you don't have to open files or put files away. You can access everything from one screen.”
Although he runs a very technologically-advanced operation, Robertson does not believe there will be really major problems for smaller brokers who are less well advanced.
Trouble in store
“The smaller ones will survive very well. They've got a loyal customer base, they're good administrators.
“The problem area will be the firms with around 15 brokers plus who are not fully mechanised. They are the ones who, if life does get tough, are going to suffer. You know, against the mechanised people. Particularly if we come into dealing with the internet and all the efficiencies which are going to come out of it.”
It seems easy for Robertson to hold these opinions, as he surveys his optical office and new telephone routeing system while eyeing up the internet for potential. But for anyone who has not embraced new technology, it is daunting.
“Brokers have to go to college,” he says. “They have to learn the basics of IT. That's how I started. I went to night school. You know, brokers just have to learn the basics. Basic access and basic spreadsheets.
“Just to get them into using machines and knowing what they can do. That's where I started from. I built from there.”
Tech talk
by Ross Hall
Net competition
n reflection there isn't much of a difference between the systems sold by the various broker system software houses. They support the same basic processes, provide quotations for motor, household and a handful of other schemes, and they exchange data with insurance companies with varying degrees of completeness (some say success!).
So where is the competitive advantageNULL
On its own, packaged software does not offer you any advantage over the company down the street with the same type of software. The whole idea of packaged software is the software house can turn the handle and out comes another one, complete with CD and manuals!
The internet is showing how important technology has become to maintain an advantage over the competition.
Meeting the precise needs of specific customer groups means developing systems which are tailored to those needs. Packaged products by their nature are constrained by the vision of the supplier, and their progress limits the speed of your innovation.
There is no doubt in my mind that the insurance intermediary market is being held back by the systems houses.
Hit-and-miss affair
These providers are having to take software and business models which have evolved over many years and try and relate them to the internet. The consequence has been a hit-and-miss affair, mostly with screens used by staff spruced up and presented on the internet.
What is more, some of these live demonstrations will inevitably lead to competition between some systems houses and their customers!
Success on the internet is unlikely to come from taking an insurance system and placing it on the web as it comes out of the box. Smart intermediaries will want to plug in different services and products to their web sites, change workflows and integrate their client and policy databases into other systems. They will be constantly looking for new ways to turn the attention of on-line users into sources of revenue.
Insurance as a means to an end may become the preserve of the ultra-specialist, able to charge high premium and commissions for high risks. For the average internet intermediary it is likely to decline in importance as new opportunities to generate revenue present themselves, and a new generation of technology-literate insurance professionals progress through the ranks.
Another truth that the internet has reinforced is those companies who get there first will be a step ahead of their competition – with the rewards to match.
So if you want to compete seriously in an on-line market now is a good time to start thinking. Ask yourself what you want from the internet, how clients can do business with you more easily and where the industry is going with it.
Then use that to develop a sound strategy to start tapping into the internet economy.
So don't be constrained by the technology you are using today – look outside of insurance for new revenue opportunities and start now.
